Since the start of the year globally there has been an alarming increase in the prices of basic food and grain as well as oil. The latter, now weekly reaching new record prices. The basic questions families around the globe are asking is: should we fill up the car or shopping cart? In all of this volatility there are opportunities for making positive medium term investment decisions.
As the types of investments become more diverse we have the opportunity to look at investment vehicles with are outside the normal plain Certificate of Deposit (CD) or Repos. With our inflation rate for 2007 being almost 17%, and withholding Tax of 25% and a budgeted 2008 target of 10% one would actually be hard pressed to find a Jamaican denominated fixed income security, which would yield a positive return on investment.
With strong global demand for metals, oil and grain from the developing and developed countries persons have now focused on packaging investment vehicles with underlying asset being commodities. Jamaican investors becoming more risk averse and having a global perspective have begun to look at these offshore options.
A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials,(like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, metals, etc.) and contracts based on them.
Individuals may participate directly as speculators and investors by buying and selling the futures contracts to make a profit. Given the global outlook the forecast is for these prices continue their upward trends.
Consider this, in the rush to find alternative fuel for vehicles and the production of the “green” mobile which uses ethanol made from corn, this initially was lauded as an innovative move, as emissions were far cleaner than what obtains. With the production of more of these vehicles and the demand for the ethanol, corn/grain prices have now begun to increase.
To profit from the global trends investors may participate via Direct Contract Purchase, Global Mutual Fund or Principal Protected Notes.
To participate as a speculator via Direct Contract Purchase one may do so through a broker. Investors can receive advice in the futures market from Commodity Trading Advisors. These advisors make specific recommendations about buying and selling futures contracts after considering the circumstances of the investor.
The investor will be seeking to make a profit by predicting market moves and buy a commodity “on paper” for which they have no practical use.
Partner Sites & Blogs: The Second Coming - Jollyjo TV - MZ Chat Study
Site Designed & Powered by RealityDesign, LLC.
